Why Vistra Stock Dropped After Earnings
Key Points
Vistra reported a loss and negative free cash flow this morning.
Investors aren't happy about that.
The company reiterated guidance for $3 billion-plus in free cash flow this year, before growth costs.
10 stocks we like better than Vistra ›
The stock of electric and gas utility Vistra (NYSE: VST) fell 6.3% through 11:45 a.m. ET Wednesday, despite the company reporting a 30% jump in revenue this morning.
Investors seem more concerned with how much Vistra lost while reporting the greater revenue.
Image source: Getty Images.
Vistra's Q1 earnings
Vistra reported a $268 million net loss for the quarter. Cash from operations surged 92% year over year to $599 million, but the company spent $768 million on capital expenditures, including purchasing nuclear fuel, resulting in negative free cash flow of $169 million for the quarter.
Despite the numbers, CEO Jim Burke insisted Vistra "kicked off 2025 with another strong quarter of business performance," and reaffirmed guidance for the rest of 2025 -- although I'm not sure how much that helps investors.
Rather than guiding on revenue or earnings, Vistra gives guidance in the very company-specific formats of "ongoing operations adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization)," and "ongoing operations adjusted FCFbG," which refers to what free cash flow would be "bG," or before capital spending intended to grow the business.
Is Vistra stock a buy?
That's actually probably the more useful metric for investors, and Vistra is saying its free cash flow, before growth costs, will range from $3 billion to $3.6 billion this year, which sounds flat against last year's $3 billion in plain old free cash flow (after investments for growth). Relative to Vistra's market capitalization of just under $46 billion, it also means the stock costs somewhere between about 13 and 15 times FCF.
And granted, that valuation will get a bit higher after growth investments are accounted for. Still, with analysts forecasting a long-term earnings growth rate of 20%, it seems a fair valuation to me -- maybe even cheap.
Should you invest $1,000 in Vistra right now?
Before you buy stock in Vistra, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vistra wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $613,546!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $695,897!*
Now, it's worth noting Stock Advisor's total average return is 893% — a market-crushing outperformance compared to 162% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor.
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